401ks: How Does Your Employer Match Up?

My last post got me to thinking – How many companies match 401ks, and how much? My old employer matched 100% up to 6%, with full vesting in 5 years. Here is some 2006 data via a press release from a company called Aon Consulting:

This study also shows that 85 percent of organizations make contributions to employee 401(k), 403(b) and 457 plans to a certain level. In fact, 29 percent of companies offer a 100 percent match on employee contributions, while 7 percent provide a 75 percent match and 39 percent of employers match 50 percent of employee contributions. The level to which companies provide a match varies, based on employee contribution. More than 40 percent of organizations match employee contributions of 6 percent or more of pay, 16 percent match pay contributions between 5 percent and 6 percent, and 18 percent of companies match employee contributions between 4 percent and 5 percent of pay.

My company matached 5% after 1 year of service. So does that mean to take full advantage of this I should contribute 5% of my check to the 401 k plan? or more or less? SOrry but I just dont understand it and the material they sent me makes no sense its all a mumbo jumbo

Just a side note about employer matching funds in 401Ks, don’t let the thought of unvested 401K money keep you in a deadend or dimissal job situation … I’ve had friends “stick it out” just one more year to vest another 20% of their employer matching funds for a 401K in a miserable job. Sometimes you just got to walk away.

Awesome information! Thanks for the link. I was actually wondering what constituted a “good” match, and I was thinking it had to be 50% to be considered good, and that 50% was pretty common. My husband just went permanent at his job and they match a measley 10%, but the people that he works with (same level or below him) think that’s good.

I am a college teacher. My employer probably has the best retirement plan. It does not match my 403b, but instead, it contributes 9% of my first $9000 salary income and 15% of any salary income beyond the first $9000 to my retirement account. The beauty is that my employer’s contributions are independent of my 403b contributions even though I have put max into my 403b account. Now I feel like that I get about 100% “match” of my 403b contributions. Oh well, this is probably why the Money magazine recently ranked college professors as the second best profession after software engineers.

The last company I worked for was as bad as your wife’s. I left before I was elible for a 401k but I did inquire a little about it. I think it was along the lines of a 25% match on 4% of your pay or something similar. Not exactly the best in the world but better than no plan. I think it was offered after one year which seems to be pretty standard.

My company provides a 50% match of my contributions up to 6% of my pay. I think this is pretty standard but they also offer immediate 100% vesting and no wait period before they start matching my contributions. They also throw in a profit share every spring roughly equivilent to 1.25% of my annual pay. In the end if I contribute only the 6% of my pay I get an extra 4.25% of my annual pay added to the pot! That’s a lot in my book, an immediate 71% return on investment!

You know I read recently (I think on MSN Money but could be wrong) that if people would stop thinking about 401k matching as free money and start thinking of it as part of their salaries more people would contribute.

Think about it from the perspective of the job offer: We’ll hire you at a rate of $50,000 per year…. or, we’ll hire you at the rate of $53,000 per year provided you put $6,000 into your company provided retirement savings account.

Most people know they should save and more people would I think if the offer was presented this way.

Our employer provides no matching. We get a discrentionary “profit sharing” contribution, which is on a 6 year vesting schedule. My profit sharing contribution was 5%, but I’ll never get close to that 6 year vesting mark before I exhaust my usefullness to this company.

My only problem with 401k’s is that there is so much variation between companies. At one employer I was able to choose anything from Fidelity to Janus to Oppenheimer to Vanguard.

At another employer, I only was able to go with American Funds. Not a badly run fund company, but what if it that one went bad either through poor management or allowing too much money to overwhelm a well performing fund.

Or, what if the fund company is a loser?

I’m sure some of this can be attributed to the cost and fees involved in offering such a program, so maybe depending on the size of the company, choices might be limited.

Regarding matching, this is offered voluntarily by the employer, and despite my complaints, I would not want any more government saying what could or could not be offered by an employer. Too bad I can’t take the 7% of medicare and SS and the employer’s contribution and have that as a 401k. We could all probably retire millioniares!

My former company, a small financial consulting company, had no match. I think I was one of a very small handful who contributed. Much of the workplace was international, so they didn’t want their money sitting around in the US.

My company matches 75 cents on the dollar up to 8 percent. So, basically they match 6%. I put away just enough so that my share and theirs equals the maximum $15K per year. I then contribute to a Roth and then just a plain old savings account. I am vested in my contributions and my employers contributions the first day on the job. (There is no vesting period)

The other plus to my company is that they fully fund a pension for me as well. Hopefully they’ll keep that around long enough for me to take advantage of it.

My employer doens’t match in our 457, but instead funds a pension plan. Their contribution to it changes from year to year based on actuarial calculations each year. I think starting in July their amount will be about 9% of earnings. The only problem is the pension vests after 5 years, and I am only half way there. I am happy where I am right now so hopefully that won’t be an issue in the near future.

Concerned about my familys future??? Help me out here but my employer contributes 6% of the first 15% invested. My math shows that on the dollar, that would be an employer contribution of less than a penny. Should I get out while I still can and find a better employer???

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